PH residential real estate prices up 6.3% YoY in Q3 2021

Nationwide house prices rose by 6.3% in Q3 2021 year-on-year against a year-on-year decline of 9.4% for Q2 2021 as per the Residential Real Estate Price Index (RREPI). The increase was driven by stronger consumer demand for residential properties such as townhouses and condominium units.

National Capital Region (NCR) residential property prices rose by 11.4% year-on-year during this period as an increase in prices for townhouses and condominium units offset the decline in prices for single detached or attached houses in the NCR.

Similarly, property prices in Areas Outside NCR (AONCR) increased by 4.9% year-on-year during the same period as prices for townhouses, duplex housing units, and condominium units rose enough to offset the drop in prices of single detached or attached houses.

Despite this marked year-on-year improvement, nationwide property prices increased by only 0.7% quarter-on-quarter as residential property prices in the NCR and AONCR rose by 3.7% and declined by 0.4% respectively.

As per a press release by the Bangko Sentral ng Pilipinas (BSP), these results run in line with the outcome of the Q3 2021 Consumer Expectations Survey (CES) which showed that more consumers opted to buy real estate properties for the quarter on signs of economic recovery.

However, it remains to be seen if the current rate of increase in property prices especially in the NCR is sustainable. Recent research by UK mortgage company, Online Mortgage Advisor, found Manila to be the second worst city in Asia in terms of property affordability.

PH quarter-on-quarter net external liability position lower by 7.3%

The Philippines’ net external liability position improved by 7.3% to USD21.1 billion as of end September 2021 against the USD22.7 billion reported for end June 2021 as per a December 29, 2021 press release by the Bangko Sentral ng Pilipinas (BSP).

This improvement comes as a result of a 1.5% quarter-on-quarter increase in the country’s total external financial assets (from USD235.3 billion in the quarter prior to USD238.7 billion as of end September 2021) offsetting the 0.7% quarter-on-quarter increase in the country’s total external financial liabilities (from USD258.0 billion in the quarter prior to USD259.8 billion as of end September 2021).

The growth in the country’s total external financial assets for the quarter ended September 2021 was driven by a 7.8% increase in the stock of residents’ other investments amounting to USD31.8 billion, a 0.8% increase in reserve assets held by the BSP amounting to USD106.6 billion, and a 0.8% increase in direct investments amounting to USD65.6 billion.

The increase in the country’s total external financial liabilities for the quarter ended September 2021 was driven by a 230.6% increase in the allocation of Special Drawing Rights (SDRs) to the country from the International Monetary Fund (IMF) amounting to USD4.0 billion alongside a 5.5% growth in non-residents’ investments in debt instruments issued by local affiliates amounting to USD47.3 billion.

BSP projects 3.5%-4.3% inflation for December 2021

In a December 29, 2021 press release, the Bangko Sentral ng Pilipinas (BSP) projected December 2021 national headline inflation to settle within the 3.5% to 4.3% range on the strength of higher electricity rates and the uptick in food prices due to weather disturbances.

This comes as a slight reversal from the downtrend to 4.2% Philippine headline inflation reported the month prior in November 2021 as per the Philippine Statistics Authority (PSA).

The November 2021 slowdown was attributed to lower inflation rates reported in the indices for food and non-alcoholic beverages (down to 3.9% from 5.3% in October 2021) alcoholic beverages and tobacco (down to 7.5% from 9.8% in October 2021), and furnishing, household equipment, and routine maintenance of the house (down to 2.4% from 2.5% in October 2021). These were offset by higher inflation rates reported for housing, water, electricity, gas, and other fuels (up to 4.6% from just 4.4% in October 2021) and transport (up to 8.8% from just 7.1% in October 2021).

Nonetheless, the BSP’s projection remains under the average inflation rate from January to November 2021 of 4.5% and well under the high of 4.9% reported in August 2021.

NEWS ROUNDUP: Omicron, BSP expected to keep policy rates low

DOH: Omicron has “high chance” of spreading to the Philippines

In a Laging Handa briefing conducted last Saturday, December 11, 2021, Department of Health (DOH) Undersecretary Maria Rosario Vergeire acknowledged the high chance of the Omicron (B.1.1.529) variant entering the country: “From the start, sinabi na natin, hindi naman po natin masasabi at hindi natin sasabihin din na hindi makakapasok. Ang pinag-uusapan natin diyan: kung kailan.”

(From the start, as we have acknowledged, we could not definitely say that it would not be able to enter. The question has been when it will enter.)

“Mataas po ang tiyansa na maaaring makapasok dito sa atin at tayo naman po ay nag-pre-prepare,” Undersecretary Vergeire added, urging continued adherence to health and safety protocols.

(There’s a big chance it will enter the country although we continue to prepare.)

The Omicron variant of SARS-CoV-2 was first reported in South Africa on November 24, 2021. The World Health Organization (WHO) designated Omicron a variant of concern on November 26, 2021.

On December 2, 2021, the Centers for Disease Control and Prevention (CDC) released an updated science brief regarding the Omicron variant reiterating the following considerations as previously acknowledged by the World Health Organization (WHO):

  • It remains unclear if the Omicron variant is more transmissible than the Delta (B.1.617.2) variant, although the CDC noted that the Omicron variant had become the predominant variant in South Africa where the variant was first discovered.
  • It remains unclear if infection with the Omicron variant leads to more severe disease compared to other previous variants, although preliminary information from South Africa noted no unusual symptoms for those infected with the Omicron variant.
  • It remains unclear if currently available COVID-19 vaccines are less capable at neutralizing the Omicron variant.

On December 12, 2021, the Philippines reported 402 new COVID-19 cases, bringing its total active COVID-19 cases to 11,255.

BSP expected to keep policy rates low amid Omicron uncertainty

The Bangko Sentral ng Pilipinas (BSP) is widely expected to keep key policy rates low ahead of its policy-setting meeting on December 16, 2021 (Thursday).

This comes as the country braces for the potential entry of the Omicron variant which has spread to more than 50 countries since it was discovered on November 24, 2021.

The BSP has kept the interest rate on its overnight reverse repurchase facility at 2.0% since November 20, 2020 to help curb the economic impact of the COVID-19 pandemic.